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ORATS (Option Research & Technology Services) Review

In this comprehensive ORATS review, we’ll examine ORATS’ services for options trading, especially its role in backtesting for strategy evaluation.

Through this article, we’ll focus on ORATS’ services and tools, inspecting all its aspects and providing you with valuable alternatives to find the best backtesting tool. We’ll look at customer reviews, what makes ORATS special, and in which areas ORATS is lacking.

Key Takeaways

  1. ORATS (Option Research & Technology Services) is a company founded in 2001, that offers complex tools and services for options traders.
  2. ORATS provides a range of tools including the Option Scanner, Trading Tool, Backtester, Stock Scanner, Signal Builder, and Trade Builder.
  3. ORATS stands out for its exclusive volatility modeling, providing more precise predictions of implied volatility. It also offers extensive analysis of earnings.
  4. ORATS offers a comprehensive backtesting framework that allows traders to test strategies over years of historical data, adjust for transaction costs, and integrate with overall portfolio management.
  5. ORATS offers its services on a subscription basis, starting at $99/month, with a 14-day trial period available at a reduced rate of $29.
  6. Customer Reviews for ORATS are generally positive. Customers appreciate the quality of data, support, and the community’s help in addressing challenges.
  7. ORATS provides valuable tools and services for options traders, helping them make informed and structured decisions.

What is Options Trading?

Options trading involves buying and selling options contracts on various securities such as stocks, ETFs, indices, or commodities. An option is essentially a financial right that sellers have, allowing you to fix a price(strike price) and predict price movements within a set timeframe.

Options Trading

Types of Options:

  • Call Options: Give the holder the right to buy the underlying asset.
  • Put Options: Give the holder the right to sell the underlying asset.

Why Trade Options?

  • Hedging: Protecting a portfolio against potential losses.
  • Speculation: Taking advantage of market movements without needing to invest in the underlying asset directly.
  • Income Generation: Through strategies like selling covered calls or cash-secured puts.

Backtesting in options trading is the process of applying a trading strategy or analytical method to historical data to see how accurately it predicts actual outcomes. Backtesting is crucially important for options trading.

Why backtesting is important:

  1. Backtesting allows traders to evaluate the effectiveness of a trading strategy before risking real capital.
  2. It helps traders to somehow simulate their trades by allowing traders to understand the potential risks associated with a strategy by observing how it would have performed during past market conditions.
  3. Traders can try different alternatives for various parameters of their strategies such as strike prices, expiration dates, and position sizing to optimize performance.
  4. Backtesting provides insight into how market events like annual reports or economic releases might affect prices and your strategy.
  5. Seeing the past performance of your strategy can build confidence in its future potential.
  6. With backtesting you’ll be able to identify and modify aspects of your strategy that might lead to significant losses.

In summary, options trading is a multifaceted investment strategy that can cater to a variety of financial goals and risk profiles. Backtesting is a crucial step in the process, ensuring that strategies are robust, viable, and have a higher probability of success in the real world.

How Did Orats Was Found?

ORATS (Option Research & Technology Services) was founded in 2001 by Matt Amberson, who started his career as a market maker on the Chicago Board Options Exchange (CBOE) in 1993 before founding ORATS.

Matt hired statistical-minded individuals for market making and options research, developing techniques to inquire superior volatility calculations and forecasts.

matt amberson young

ORATS was created to provide options trading tools using the methods developed for a successful market-making business. The company developed the Smoothed Market Values (SMV) system to generate the most accurate Greeks, implied volatilities, and theoretical values in the industry. Over time, ORATS has expanded its services to include core data derived from the SMV system, data APIs, backtesting options strategies for clients, and an online platform for backtesting called Wheel.

The ORATS team has grown to include professionals like Jon Kong (Director of Engineering since 2007) and Tyler Cheves (Product Manager with experience in options trading platform development). ORATS continued to add more to its services by adding stock scanning, trade building, earnings analysis, and more to its suite of web tools.

In recent years, ORATS has introduced new broker integrations, and more are on the way, along with better trading capabilities and a new backtest finder. This finder allows users to search, filter, and sort millions of backtests.

What is Orats (Option Research & Technology Services)?

ORATS (Option Research & Technology Services) is a company that provides sophisticated data and tools for options traders. ORATS distinguishes itself from competitors through several unique aspects. A major factor that sets ORATS apart is its exclusive volatility modeling. This feature is specifically created to deliver more precise and dependable predictions of implied volatility. Implied volatility is a vital factor in options pricing and strategy development. Moreover, the platform offers extensive analysis of earnings, which includes historical earnings data, expected move calculations, and post-earnings volatility analysis. This makes it an invaluable tool for traders who focus on strategies related to earnings.

Another unique feature of ORATS is its Wheel Strategy tool, which helps users identify and manage options selling strategies that involve selling puts until assigned stock and then selling covered calls. The platform also provides highly customizable scanning tools that allow users to filter and search for options based on a wide range of criteria, including proprietary metrics, enabling them to find opportunities that match their specific trading style.

ORATS offers an extensive backtesting framework that allows users to test their options strategies over years of historical data, including the ability to backtest complex multi-leg strategies and adjust for transaction costs. The platform also provides tools for integrating options strategies with overall portfolio management. ORATS stands out for allowing users to analyze the impact of options on portfolio risk and return. These unique aspects, combined with ORATS’ data quality and advanced analytics, make the platform one of the best choices in the industry.

ORATS’ TOOLS

The Option Scanner

Orats’ options scanner tool is a platform designed for options traders to scan, analyze, and rank different option trades based on multiple criteria.

orats options scanner
  • ORATS allows you to choose from over 5,000 symbols, including common ETFs like SPY and QQQ or individual stocks like AAPL and TSLA. There’s also an option to start with stock scans.
  • The tool allows you to specify a market outlook to customize the scan results. This could be bullish, bearish, or neutral, for instance.
  • Users can scan for different types of strategies, including bullish, bearish, and neutral.
  • Orats’ Option Scanner allows you to specify your target days to expiration. You can adjust this from 1 week to a year.
  • You can choose specific strike prices and delta values.
  • You can customize six different strategies at a time by adjusting variables like strike deltas and spread/stock price.
  • Option scanner provides various metrics such as D% (Delta percentage), POP% (Probability of Profit), and theoretical values like S% (which might be related to volatility skew or another specific metric). But the most important feature is that you can adjust the weighting of these columns to rank the trades according to your preferences.
  • The results of the scan can be sorted by any column which will allow users to easily identify the most relevant trades.
  • Once a trade is selected, users can view a payoff diagram, send the trade to a broker, or visualize it on a Trade Builder.
  • The tool connects to popular brokers like Tradier, TD Ameritrade, and upcoming integration with Interactive Brokers and TradeStation.
  • Users can add symbols, choose a stock scan, add strategies, and check for upcoming earnings or dividends.
  • In the strategy section, you can set up strategies like a long call spread, input days to expiration, strike deltas, and more.

In conclusion, Orats’ option scanner tool is a complete platform that provides options traders with the ability to perform detailed scans and analysis of potential trades, offering a high degree of customization in strategy selection and ranking, integrated with the convenience of broker connections.

Orats Trading Tool

Orat’s trading tool is a comprehensive platform for options trading. It is designed to help traders not only execute orders but also manage positions, analyze market intelligence, get trade ideas based on historical backtesting, and understand profit attribution through a comprehensive breakdown of various factors. Let’s review Orat’s trading tool with its advantages and disadvantages.

orats trading

Order Management and Position Monitoring

  • Orats Trading tool allows you to send orders through your preferred broker. It also seems to support paper trading, which is a risk-free environment to test strategies.
  • There is functionality for monitoring positions with text and email alerts to stay updated on your trades.

Market Intelligence

  • OptionRATS’s trading tool scans time and sales data to uncover significant trades in the market, which is critical for forming an investment thesis.
  • The tool also features a Market Intelligence tab with visuals for market-wide reports, such as top movers, unusual volume, and upcoming earnings and dividends.

Trade Ideas

  • Orats’ tool provides backtested trade ideas, offering historical performance metrics since 2007, including annual margin return and maximum drawdown percentages.
  • The platform ranks trade ideas based on return on risk and current market conditions using factors like VIX, SMA, RSI, IV Percentile, and slope percentile.
  • Orats’ tool updates the table of trade ideas every ten minutes, keeping the information timely and relevant.

Profit Attribution

  • The tool breaks down the impact of the Greeks, skew, and theoretical values on trades on a per-trade basis. This helps you to understand the reasons behind the price changes in your positions, whether it’s due to Delta, Vega, or other factors.

Trade Analysis

  • You can adjust variables like implied volatility (IV) and days to expiration (DTE) to forecast how the theoretical value of a position might change.

What I Love About Orats Trading Tool

  • Detailed metrics like P&L, Delta, Gamma, Theta, Vega, D%, and S% are at your service. You’ll have the full spectrum of your portfolio’s performance.
  • Orats’ Trading tool is especially good for strategies like Long Put Calendar and Iron Butterfly with its indicators of stock, expiration, price, POP%, and risk/reward ratios.
  • Payoff diagram and adjustable parameters for implied volatility changes and days to expiration, offering a “What if?” scenario analysis tool.

In conclusion, Orats’ trading tool is a powerful and comprehensive platform for options traders with its blend of execution, analysis, and educational features. You don’t need Orats for informed trading decisions but it surely helps. It integrates analytical tools with practical functionalities, such as order sending and profit tracking, to be suitable for both the strategic and operational needs of trading in the options market.

Orats Backtester

orats backtester

Backtesting Engine

  • The backtesting engine utilizes a data set that goes back to 2007. This is a significant historical period to test strategies.
  • There are millions of backtests available covering over 5,000 symbols and 25 different strategies for you to search through.

Strategy Testing and Customization

  • You can create custom backtests with specific entry and exit points for over 700+ proprietary indicators.
  • Orats’ backtester allows you to test bullish, bearish, and neutral strategies, including complex ones like calendars, butterflies, and condors.
  • Backtests can be filtered by performance metrics such as annual return, sharpe ratio, max drawdown, etc.

Detailed Analysis Tools

  • You can view individual trades within a backtest while examining P&L, entry and exit times, prices, implied volatility, and all Greeks, down to the minute.
  • Backtest inputs include; days to expiration, strike deltas, spread/stock ratio, and entry triggers such as VIX levels, 14-day RSI, IV Percentile, and Slope Percentile.

Backtest Results Interface

  • Orats’ interface is very user-friendly. You can easily input symbols, strategy types, days to expiration, and strike deltas.
  • It’s also quite easy to analyze the data since all the data are displayed in a structured way that allows you to quickly assess the top backtests based on chosen performance metrics.

Entry and Exit Triggers

  • With OptionRats’ backtester, you can select up to two entry triggers at a time, and various exit triggers. Why is it good? Because you can use it to simulate trading strategies more realistically.

Practical Features

  • You can rank the backtests by criteria like best return on risk and such.
  • Backtester is designed with a focus on usability with clear steps and a user friendly layout.

Visualization and Metrics

  • You can analyze options with metrics like the Synthetic Market Value (SMV) compared to the mid-price of the option which helps identify if the option is overvalued or undervalued.

In summary, Orat’s options backtester tool provides a useful platform for traders to simulate and analyze various options strategies using historical data. Backtester combines an extensive database of backtests with powerful analytical tools and customizability.

Backtester enables users to precisely test their trading ideas and gain insights into potential performance. The tool stands out with its clarity and detail and allows traders to make informed decisions based on comprehensive backtest results.

Stock Scanner

The Orat’s stock scanner tool is an advanced platform for scanning over 5,000 stocks and ETFs using a combination of exclusive option indicators and fundamental indicators. Orats’ Stock Scanner is designed to assist traders in identifying trading opportunities based on a comprehensive set of data points.

orats stock scanner

Why Orats Stock Scanner Stands Out

  • The scanner gives access to over 700 specialized option indicators and 22 fundamental indicators.
  • It allows comparison of a single stock against all stocks in a specific SPDR sector ETF (like technology, healthcare, etc.).
  • You can utilize standard indicators such as earnings, stock volume, and implied volatility, in conjunction with fundamental metrics like the PE ratio and market capitalization, as well as option-specific indicators such as contango and slope.
  • By combining different indicators, custom ratios can be created which offers a high degree of personalization for scans.
  • You can also benefit from several pre-canned scans for common trading scenarios, such as “Hard-To-Borrow,” “Low IV30d,” “High IV30d,” and scans like; put-call skew, and unusual volume.
  • You can begin your scan with a list of symbols or choose from predefined groups like components of an S&P ETF.
  • You can add preset indicators related to price, implied volatility, and more. This is especially good for filtering stocks based on specific criteria.
  • You can search through a vast library of indicators and create custom ones based on your changing strategies.
  • The results of the scan are displayed in a clear format that shows relevant information like stock price, volume, and selected indicator values.
  • Scans can be saved for later use, and users have the option to send the results to the option scanner for further analysis or trade execution.

In summary, Orats’ Stock Scanner tool is designed to be a flexible, and user-friendly platform for traders to conduct thorough market scans based on a diverse set of technical and fundamental criteria. Integration with other tools in the trading suite, such as the option scanner makes your market analysis and trade execution better.

Signal Builder

The Orat’s Signal Builder tool is an advanced platform for options traders. It’s especially good to develop, test, and implement trading signals. Orats signal builder offers a range of features for creating and backtesting custom intraday signals using various technical indicators and criteria.

orats signal builder

Custom Signal Creation

  • You can choose from over 5,000 stocks, ETFs, or indexes to build signals.
  • There are over 80 exclusive indicators available to create custom criteria for signals with technicals like; moving averages, RSI, and others.

Backtesting Signals

  • You’ll be able to utilize Intraday Data API to backtest custom signals on a minute-by-minute basis for the past 30 days.
  • You can adjust different settings within the backtester to calculate performance metrics. You can also change the timeframe by dragging and widening the view box slider.

Proprietary Indicators

  • The Orats Signal Builder takes the use of technical analysis on another lever by providing access to hundreds of proprietary indicators.

Broker Integration

  • Orats’ signal builder can be integrated into Tradier and TD Ameritrade moreover, Orats is currently working on integrating the tool with Interactive Brokers, and TradeStation.

In conclusion, Orat’s Signal Builder tool is designed to provide a rapid and versatile platform for traders to create, backtest, and refine their trading signals with a high degree of customization.

Trade Builder

Oras’ Trade Builder tool is used for constructing and visualizing options trades. This tool provides a multi-faceted graphical analysis of a stock’s option chain data, earnings history, and other crucial indicators to help you make informed decisions.

orats trade builder

Trade Visualization

  • You can chart future expirations and strikes.
  • Overlays are available for earnings, trendlines, volatility, open interest, and more, providing a comprehensive view of different market factors.

Volatility Analysis

  • Orats Trade Builder visualizes future volatility and indicates areas where it is considered undervalued (green) or overvalued (red).
  • Orars’ proprietary models are used to forecast both short-term and long-term volatility, as well as the slope (rate of change in volatility).

Open Interest & Volume

  • You can see Open interest (OI) and volume for each option strike on Orats Trade Builder’s interface.

Interactive Chart Features

  • Trade builder utilizes a heatmap for value volume which can represent areas of high options activity or interest.
  • The tool allows for the dragging and dropping of trade legs, which is crucial for creating and adjusting options strategies visually.
  • You can also see implied volatility (IV) versus historical volatility (HV) over time. This aspect is crucial for assessing whether options are priced reasonably relative to past stock movements.

Orats Trade Builder’s Interface

  • The interface is designed to be interactive and allows you to add indicators, adjust the zoom level, and select different overlays for a customized view.
  • The chart displays a time series of the stock price with significant events like earnings marked for easy historical reference.

In summary, I loved Orats’ Trade Builder tool for its dynamism and informativeness for options. integrating various data sources into a single interactive chart. This allows traders not only to visualize potential trades with all relevant information but also to analyze historical performance and market sentiment.

Historical Financial Data

The Orats’ data tool offers detailed financial and options data analysis for traders and investors.

orats historical data
  • The tool allows the overlaying of key financial metrics such as PE Ratio, EPS Estimated vs. Actual, and EPS Revisions onto the earnings move chart.
  • You can download 19 earnings metrics for deeper analysis.
  • You can also see an overview of the company including market cap, industry classification, and next earnings/dividend dates. along with recent news articles relevant to the company.
  • The tool utilizes indicators like IV Percentile, Forecasted Volatility, and Historical Volatility to provide insights into the company’s stock volatility.

Options Chain and Volatility Surface:

  • Monthly IV Graph: This graph shows how each strike’s implied volatility compares across the entire volatility surface.
  • IV Skew and ATM IV: The volatility surface includes call and put mid implied volatilities, overlaid on a smoothed IV skew graph for each expiration.
  • Data Points Highlighted: The graph highlights the highest and lowest slopes, IVs, confidence levels, and market widths in implied volatility terms (mwVol) for all expirations.

In conclusion, Orat’s data tool offers an in-depth analysis platform for earnings data, company financials, and options trading. It seems to cater to both fundamental analysts looking at earnings performance and options traders analyzing volatility to gain insights for potential trades. The tool integrates this data with visual aids and the ability to connect to brokerages, making it a potentially powerful resource for informed trading decisions.

Orats’ Dividents

Orats’ Dividends service provides a comprehensive data set focusing on dividend forecasts and historical dividend information for stocks with US exchange-listed options.

Daily FTP Download Service:

  • Users receive daily updates on expected ex-dividend dates and forecasted dividend amounts for the next 2.67 years via an FTP (File Transfer Protocol) service, making sure that they have the latest information for their analyses.

Types of Files Included:

  • Dividends File: Lists upcoming dividend ex-dividend dates, expected payment amounts, and the status of the data (Estimated, Acknowledged, etc.).
  • Stock Div Forecasts: Compares projected dividend amounts with those implied in the options market, making adjustments for splits and currency conversions.
  • Stock Div Hist Growth: Contains Oratz’s raw proprietary dividend forecast amounts without comparison to market-implied amounts.
  • Special Dividends: Includes upcoming confirmed special dividends, adhering to OCC rules regarding dividend announcements.

How OptionRats Analyzes Data

  • Orats combines historical patterns, implied dividends from options, and real-time news to provide accurate dividend projections.
  • They utilize 14 years of historical forecasts and actual dividends by integrating dividend trend models for future predictions.
  • Seasonal effects are considered in Orats analyses with adjustments made for observed irregularities.
  • Implied volatility (IV) indicators are used to calculate implied dividends along the options expiration calendar.
  • Intraday updates are provided in partnership with Wall Street Horizon.

ORATS API

Intraday Data API:

  • Live, Delayed, and Historical Data: You can access one-minute options data back to August 2020 for over 5,000 symbols.
  • Granular Data: Drill down to the options chain for any minute during the trading day, with filters for ticker, expiry, and strike. All options include Greeks and ORATS smoothed values.
  • Implied Monies: Detailed indicators for every expiration, including seed volatilities for various call deltas, ATM term structure IV, weighted market width, and confidence levels.
  • SMV Summaries: Implied volatility with interpolated IVs, forward and flat forward volatility, borrow rate, contango, and other confidence measures.

Data API:

  • End-of-Day Data: Access live, delayed, and historical end-of-day options data back to 2007, augmented with hundreds of proprietary indicators.
  • Strikes: High-quality bid-ask quotes and Greeks, cleaned using ORATS’s Smoothed Market Values system, including theoretical price estimates.
  • Core Data: Track over 100 indicators for every stock, including correlations, historical volume, and ORATS forecasts of implied volatility and slope.
  • Volatility Data: Historical stock intraday volatility, IV rank, percentiles, skewness, and kurtosis indicators for the implied volatility surface.

ORATS’ PRICING

  • Orats offers its services on a subscription basis, For $99 per month, you get access to an all-in-one trading tools package that includes a variety of features for research, backtesting, trading, and risk management. This package includes tools such as an Option Scanner, Trading platform, Backtester, Stock Scanner, Signal Builder, Trade Builder, Earnings & Financials analysis tools, Live Data (requiring a Tradier account), Broker Connect for trading integration, and access to a BETA Trade History feature.
  • Additionally, you can try the service for 14 days at a reduced rate of $29 to test its capabilities before committing to the full monthly subscription. The subscription also includes 100 backtests per month for testing trading strategies.
  • Historical data going back to 2007 is available for a one-time fee.

ORATS ALTERNATIVES

Cboe LiveVol

  • Cboe LiveVol provides options analytics, including historical and real-time data, volatility analysis, and risk management tools.
  • While ORATS focuses on backtesting and strategy development, Cboe LiveVol is more geared towards real-time options data and analytics. Cboe LiveVol is known for its extensive data offerings and is often used by traders for its volatility analysis capabilities.

TradeStation

  • TradeStation offers a strong trading platform with extensive options analysis tools, including charting, backtesting, and strategy optimization features.
  • TradeStation is a full-fledged trading platform that integrates options trading with a wide range of other financial instruments. It provides more comprehensive trading capabilities compared to ORATS, which is more focused on options data and backtesting.

Thinkorswim by TD Ameritrade

  • Thinkorswim is a popular trading platform that offers advanced options trading tools including customizable charts, technical analysis, and strategy backtesting.
  • Thinkorswim is known for its user-friendly interface and comprehensive trading tools. It offers a broader range of features compared to ORATS, including more advanced charting and technical analysis tools.

OptionVue

  • OptionVue provides options analysis software with tools for strategy modeling, risk management, and trade simulation.
  • OptionVue is similar to ORATS in its focus on options strategy analysis and risk management. However, ORATS offers a more extensive backtesting framework and data services.

OptionNET Explorer:

  • OptionNET is a platform for options analysis and strategy development. It’s known for offering trade simulation, risk analysis, and performance tracking.
  • OptionNET Explorer is comparable to ORATS in its emphasis on strategy development and analysis. Both platforms provide tools for backtesting and risk management, but ORATS has a more extensive data offering.

Tastyworks

  • Tastyworks is a brokerage platform with a focus on options trading, offering intuitive tools for strategy analysis and trade execution.
  • Tastyworks is primarily a brokerage platform with integrated options trading tools, while ORATS is more specialized in options data and analytics without offering brokerage services.

Orats Reviews

From what I’ve seen online, customers are generally positive about ORATS, appreciating the quality of data and the support provided by the team and Matt.

Customers praise the accuracy of ORATS’ data, comparing it favorably to Bloomberg’s data. They appreciate the responsiveness of Matt, the founder of ORATS, in answering their questions. However, they want more guidance on entry-level programming questions, and they raise concerns about API call limits and data delays.

Customers generally express gratitude for the community’s help in addressing their data warehousing challenges. They highlight their need for rapid data querying with low latency and ORATS being a solution for their needs. Customers often use Clickhouse and ORATS collaboratively to handle ORATS data for compressing and managing large quantities.

ORATS customer reviews are positive, with customers valuing the quality of data and support. However, there are some technical challenges and limitations that users hope to overcome with further assistance and exploration of solutions.

Conclusion

In conclusion, options trading is a versatile investment strategy that allows traders to leverage market movements and hedge against potential losses while generating income through various strategies.

Backtesting plays a crucial role in evaluating the effectiveness of these strategies while providing insights into their potential risks and returns based on historical data.

ORATS (Option Research & Technology Services) stands out in this field by offering sophisticated tools and services, including the Option Scanner, Trading Tool, Backtester, Stock Scanner, Signal Builder, and Trade Builder. These tools, combined with ORATS’ unique volatility modeling, earnings analysis, and comprehensive backtesting framework, make it a valuable resource for options traders. With its extensive data analysis, customizable scans, and integration with popular brokers, ORATS enables you to make informed decisions and refine your trading strategies for better outcomes.

I personally loved Orats and I suggest you check them out.

ORATS FAQs

What is ORATS?

ORATS (Option Research & Technology Services) is a company founded in 2001 that provides complex tools and services for options traders. Their services include; Option Scanner, Trading Tool, Backtester, Stock Scanner, Signal Builder, and Trade Builder.

What makes ORATS unique?

ORATS stands out for its exclusive volatility modeling and extensive analysis of earnings. ORATS also stands out with its comprehensive backtesting framework that allows traders to test strategies over years of historical data.

How much does ORATS cost?

ORATS offers its services on a subscription basis, starting at $99/month. A 14-day trial period is available at a reduced rate of $29.

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